. . . just like democracy, Pacifica is too important to be left to its elected bodies . . .
“Problem? Go tell Michelle – or Jan”
[Thanks to the readers who yesterday & today sent PacificaWatch this alleged copy of JannyG’s email. A few remarks are added after the text.]
*From:* Jan Goodman <firstname.lastname@example.org>
*To:* email@example.com <firstname.lastname@example.org>; KPFK LSB Yahoo Group <email@example.com>; Arthur Schwartz <firstname.lastname@example.org>; Pacifica National Board <email@example.com>; WBAI LSB Public <firstname.lastname@example.org>; Pacifica Executive Director <email@example.com>; Kpfalsb <firstname.lastname@example.org>; “email@example.com” <firstname.lastname@example.org>; Anita Sims <email@example.com>
*Sent:* Thursday, October 15, 2020, 11:47:24 AM PDT
*Subject:* One year extension of FJC loan — offer
CC: Pacifica Interim ED Lydia Brazon; Local Station Boards; CFO: Anita Sims; Counsel: Arthur Schwartz
As a result of the financial position in which we, Pacifica, find ourselves, i.e. the inability to repay the FJC loan when it comes due in April, I considered what course I, as a fiduciary, could follow to help Pacifica in our current situation. I contacted FJC and spoke to the President of the Board and the Chief Legal Officer. I clarified that I was calling as a Board Member, and not as a representative of the Board. The purpose of my call, I explained was to explore whether there might be a possibility of extending the loan directly, between FJC and Pacifica.
They told me about FJC and its role and mission. They also made it clear that they were familiar with Pacifica, its background and especially, the Empire State Building situation.They expressed their concerns about Pacifica, its finances, changing leadership and governance, and that they were happy that FJC has been able to help us survive. They also told me that all the loans which they provide under the program we are involved with carry the same interest rate: 3% over prime.
I also brought them up to date a bit about Pacifica, and a tad about myself, including the fact that I have been involved in numerous political and Non-Profit organizations, including Pacifica Governance for about 16 years and that in my “off hours” I’m a lawyer who has been involved in helping structure numerous business deals, including the “Pacifica Bridge Loan” in 2018, etc.
During the course of that conversation I explained the progress that Pacifica had made in getting its Audits more current, the fact that there was a Bylaw amendment process underway which had the potential of changing the governance structure of Pacifica, but made it clear that the PNB was divided on the subject. I also explained that Pacifica was not currently in a position to pay back the loan on its current maturity date, and that we were pursuing various financial options. I also answered whatever questions they asked, to the best of my ability. As a result of that conversation, Pacifica’s progress towards getting its audits current, and the fact that there is serious discussion and potential Bylaw Amendments relating to reducing the Board size and structure to enable Pacifica to become more stable and more able to face the financial and other challenges that it faces, they were encouraged enough that FJC is willing to tentatively offer to extend the loan to Pacifica for another year, with the same terms, without interruption and without additional financing costs.
I asked them about whether this tentative offer needed to be kept confidential, and they told me that that was not necessary. They are pleased to let people know about the services that they have provided to Pacifica and that they offer others.
Hopefully the Pacifica National Board will take this opportunity to extend the loan quickly so that we can concentrate on helping Pacifica move forward. Of course I will be happy to help facilitate this. Being of service to Pacifica so that it can flourish has always been my goal. I hope that this is another step in that direction.
Respectfully and with great hope for the future,
Pacifica National Director, KPFK
Well, that’s a turn-up for the books.
Three sets of points:
what this means, including the obvious effects;
why is the Foundation for the Jewish Community, operating as FJC, making this alleged offer?; &
as mentioned 2Oct, has the $3.265m loan already been extended from 1Apr2021 to some date in Sep2021?
What this means, & the obvious effects
- A director approaching FJC without knowing whether ED ‘Fabiana’, for example, was already in dialogue with them, thereby making Pacifica look uncoordinated, making it look ‘unprofessional’, making it look a lil silly;
- after the approach, Prez Lorin Silverman & Chief Legal Officer Mark Cohen were happy to negotiate with JannyG, rather than give her a ‘well, thx 4 the heads-up, now we’ll ask the Pacifica ED what Pacifica wants’;
- FJC showed where they stand on the breakers v. solidarians divide, choosing to collude with the breakers, giving credence to their credibility as ‘agents able to get things done’, as ‘respected by the monied & the powerful’, as ‘people that those in RealWorld can understand & get on with’;
- JannyG dropped a boulder on the PNB Loan Repayment Cttee, obliterating it before it could even have its first roll-call (it had been set-up Th1Oct with DeWayne Lark’s PNB motion, https://kpftx.org/archives/pnb/pnb201001/pnb201001_6467_agenda.pdf – page 2; “very unfair”, the measured DeWayne told a reporter, in his understated way);
- JannyG isn’t some ordinary breaker: she’s the Pacifica Vice-Chair-in-waiting of the three-year transition board named in the latest constitution petition brought by the breakers, https://newdaypacifica.org/transition-officers/;
- this lone wolf ops will be plastered all over the breakers’ propaganda if the petition leads to referenda: ‘we’re Pacifica’s saviours, only we can get things done! . . . you may have doubted us last time, but see, only we can Nike!’;
- the by-passing of both ED ‘Fabiana’ & the PNB can only sow discord, antagonise interpersonal relationships amongst all concerned;
- the episode is further evidence that the ED & PNB majority are paralysed, unable to take the initiative; &
- it’s another example of the breakers, rather than the Pacifica solidarians, seizing the initiative in the non-contest that would otherwise be a war of manoeuvre, for only one side knows how to fight; this, additional to the breakers reigning supreme in the non-contest that would otherwise be a war of position, the preparing of the ground prior to contact with the enemy, for only one side comes up with plans. This isn’t even men against boyz: it’s a slaughter.
Politically, what’s happened shows that (1) ED ‘Fabiana’ & the PNB majority have displayed a paralysis that simply wasn’t warranted by the extant conditions, & (2) the breakers, once again, have the energy & ideas to take the initiative.
The leading question, sadly, remains all forlorn, orphaned: when will the majority of elected Pacifica officials act on their own terms, rather than being reduced to acting as a reaction? When will activity supplant passivity?
Why has FJC made this alleged offer? Market conditions, & the borrower under-subscribed ALF
Back in summer 2019, this blog explained the falseness of a story repeatedly peddled by the likes of Nancy Sorden (PNB Chair when the FJC loan contract was signed, & WPFW listener-delegate), Chris Cory (the 2019 PNB Finance Cttee Chair, & KPFA listener-delegate), Eileen ‘it’s Ros-in’ Rosin (then & still PNB Audit Cttee Chair, & WPFW listener-delegate), as well as regular suspects, Goodman & Aaron:
[t]he Pacifica advocates of the loan from the Foundation for the Jewish Community, FJC, have presented it as a good Samaritan, doing it out of the kindness of its heart. In fact, FJC is in a competitive market as a manager of donor-advised funds, a sector of the charity industry. One of its money-making operations is running a fund that lends at prime-plus, the Agency Loan Fund, ALF. Donors to FJC can lodge money with ALF, as can outsiders, all hungry for those extra percentage points of interest earnt.
FJC had been having problems finding borrowers for these prime-plus loans: only 46% of ALF had been converted into loans at 31Mar2018, the very time of the 2Apr Pacifica loan (FJC’s latest auditor’s report, year-end 31Mar2018, page 20; page 22 of the PDF). So, of course, Pacifica, made to use its three buildings as collateral to satisfy the 3:1 assets-to-principal ratio, assets here being “the appraised value of the mortgaged properties under the Deeds of Trust” (Section 1.1(7), p. 2 of the loan agreement – link below), was welcomed with open arms. Sentiment this was not. http://fjc.org/uploads/user-uploads/image/FJC%203-31-18%20FINAL.pdf [loan agreement: https://mega.nz/#F!PloCiSqJ!9rLejSkttE7gCVCCq3q86g?b0IBlaiR]https://pacificaradiowatch.home.blog/what-fjc-has-made-pacifica-do/
The conversion into loans has now improved: from the 46% at 31Mar2018, the next year it was 45% (with the fund growing a lil, from $57.1m to $58.4m), rising to 54% at 31Mar2020 (with a 11% spurt to $64.7m; FJC auditor’s reports, pp. 21 & 24 respectively). As the Georgian infamously said, dizzy with success. The reports, since FY2006 (bar FY2007), are here: https://mega.nz/folder/4Al2TDCD#7brl9C0CSfpESGgby6ZTrQ.
For whatever reason, FJC has found it difficult to attract borrowers with assets that can be collateralised. ALF lends at p+3, prime plus 3 percentage points, so currently, & since 16Mar2020, lends at 6.25%, which is 92% over prime (3 ÷ 3¼). ‘Earning’ a safe 6.25% is probably better than bonds & shares – so keep Pacifica in ‘the FJC family’. After all, thru to 1Apr2021, it will have paid ~$750k for the privilege of collateralising all its property to FJC (that’s an average $250k a year, $62.5k a quarter, assuming that the current interest rate doesn’t change). Extending a year, Pacifica listeners hand over an extra ~$200k (@6.25% = $204 062.50). Makes a four-year total of ~$950k. 😋 👍 😋 for those donor-advised accountholders.
Money aside, FJC’s leader, Prez Lorin Silverman, by undermining ED ‘Fabiana’ & the Board as a whole, has made plain the sort of Pacifica he prefers: a ‘normal’ broadcaster, ‘vanilla’, predictable. In a word, Amerikan.
(Non-trivial note, a possible $287 223.92 note, in fact: the loan agreement actually speaks of percent, not percentage points . . . (let that sink in for a moment) . . . : “the Prime Rate […] plus 3%” (Sec. 2.2, p. 5; p. 6 of the PDF) . . . (pause again) . . . making the current interest rate not 6.25% but (3.25 x 1.03)% = 3.3475%. Quite the difference . . . ~$95k a year, in fact. Will Pacifica challenge FJC on this? . . . [A post this week, including an open letter to ED Brazon & legal counsel Arthur Schwartz, will give the workings for the three years, $287 223.92 = 748 815.26 − 461 591.34.])
Has the $3.265m loan already been extended from 1Apr2021 to some date in Sep2021?
On 2Oct I said there’d be a post on this, so . . .
The question arises because of a mention in Pacifica’s FY2018 auditor’s report. Dated 16July2020, it was accepted by the 16July PNB meeting but first published Sa15Aug (sic), without either explanation or apology, on its homepage & https://pacifica.org/finance_reports.php. It said the $3.265m loan would mature in “September 2021” (p. 14; p. 16 of the PDF). This was news, the first time such a thing had been stated.
So what was the prior evidence? (All emphases are added; links at the end.)
- “This Loan Agreement (this ‘Agreement’) is entered into as of April 2nd, 2018” (2Apr2018 Pacifica-FJC loan agreement, p. 1; p. 2 of the PDF);
- & “the loan matures after three years” (6Apr2018 Pacifica press release);
- but, & this is the killer, “[t]he terms of the note call for interest-only payments due quarterly, with a final lump-sum payment of all unpaid interest and principal due in September 2021” (Pacifica’s FY2018 auditor’s report, 16July2020, p. 14);
- & yet FJC’s auditors declared on 27Aug2019 & 16Sep2020, using the same wording, that no loan runs into 2021: “[l]oans receivable consist of interest-bearing loans to charitable organizations […] with varying maturities through December 2020” (Note 4: FY2019 report, p. 17 (p. 19 of the PDF), & the FY2020, p. 19; FJC’s year-end is 31Mar);
- & those two reports, so starting the day before the Pacifica loan began, state in Note 4 the sale of FJC loans, but none is of the size of Pacifica’s $3.265m (remember, the auditors have to disclose material events occurring after the year-end);
- . . . so, (1) who’s right: Pacifica’s auditor saying Sep2021 or FJC’s auditor saying Dec2020 at the latest? . . . or are they both wrong, & the early statements are correct, with the loan maturing 1Apr2021?;
- & (2) if the loan matures 1Apr2021, & FJC’s expensive auditor’s report is accurate on the maturities date (but inaccurate on loan sales), who now owns the Pacifica loan?
The contradiction wasn’t noticed by anyone at either the Tu14July PNB Audit Cttee or the Th16July PNB. The claim for Sep2021 was so anomalous that I said nothing at the time, assuming it to be an error by Pacifica’s auditors, Rogers & Company. Their FY2017 report had factual errors, as noted in this blog, so my surprise soon passed. But what do I know?
Maybe one day a Pacifica director or a lowly LSB delegate will find out, & tell us.
Pacifica-FJC loan agreement, https://mega.nz/#F!PloCiSqJ!9rLejSkttE7gCVCCq3q86g?b0IBlaiR; 6Apr2018 Pacifica press release, https://www.kpfk.org/blogs/kpfk-and-pacifica-news/post/pacifica-announces-settlement-with-empire-state-building-and-empire-state-realty-trust/ & https://www.wbai.org/articles.php?article=3570; Pacifica FY2018 auditor’s report, https://pacifica.org/finance/audit_2018.pdf; & FJC public filings folder, https://mega.nz/folder/4Al2TDCD#7brl9C0CSfpESGgby6ZTrQ.